BSP: FDI plummets to pandemic-era low
Foreign direct investments (FDI) in the Philippines declined to a pandemic-era low in September amid developments at home and abroad that weighed down on investor sentiment.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed FDI inflows outpaced outflows by $320 million. This net inflow, however, was nearly 26-percent lower than a year earlier and was the lowest since April 2020’s $314 million, or back when the COVID-19 pandemic upended the global economy.
The central bank expected the Philippines to end the year with a cumulative net inflow of $7.5 billion. For the first nine months of the year, the Philippines posted a net FDI gain of $5.5 billion, down 22.2 percent from the same period in 2023.
Unlike foreign portfolio investments, which can flee at the first sign of trouble, FDI tends to be longer-term capital that can create jobs. The government has been seeking to draw more of such inflows while retaining those already here.
Years after the COVID-19 pandemic, the Philippines ran headlong into a new set of headwinds, ones now casting a long shadow over the Marcos administration’s growth ambitions.
Abroad, escalating trade tensions have introduced a fresh kind of uncertainty. Geopolitical flash points, from US-China rivalry to regional security risks, have further clouded the outlook. At home, a widening corruption scandal has dealt a sharp blow to business and consumer confidence, while some structural constraints persisted.
“FDI remains cautious amid high global rates and slower growth,” Robert Dan Roces, chief economist at SM Investments, said. “Inflows are still positive, but momentum will likely stay moderate until borrowing costs ease and reforms gain traction.”
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, flagged overlapping problems.
“Globally, investors remain cautious amid slower growth in major economies and persistent geopolitical uncertainties,” Asuncion said. “Domestically, while reforms like CREATE MORE and infrastructure programs are positive signals, structural bottlenecks and policy clarity issues continue to weigh on investor confidence.”
Broken down, new equity capital placements—a key measure of fresh investment—exceeded withdrawals by $35 million in September, seven times bigger year-on-year. But most of the month’s FDI came in the form of intercompany borrowings between multinationals and their Philippine affiliates, which fell sharply, dropping 40.7 percent to $201 million.
Reinvestment of earnings, meanwhile, edged down by 2.1 percent to $84 million.
“Looking ahead, we expect modest recovery in FDI inflows as reforms gain traction, but sustained improvement will depend on consistent policy execution and a more competitive investment environment,” UnionBank’s Asuncion said.
